You do still file an expense report so I feel confident that it's on the up-and-up for tax purposes. The docs said they did research and people got a greater sense of reward from bonuses like this instead of just having the number in the next direct-deposited paycheck be slightly larger.

Anecdotally, it certainly made a larger emotional impression on me. I had gotten a similar cash bonus a while back that I intended to also use for music stuff and basically procrastinated figuring out what to get until I forgot about it entirely. This time I actually got something and then sent a nice email to the person I got the bonus from thanking them.

It's been a really nice experience.

I've understood expense reports to be buisness expenses that were first paid for by the employee and the employer compensates them for it. In that case it's not taxed as income as it was never really anything the employee "got".

It all depends on how your company accountants do it, they could be doing something unusual, but the way you've described it sounds like tax evasion.

I dont really care, but if you like the benefit you may not want to bring it up in public forums.